Carvana (CVNA) stock gapped higher in early trading Thursday after the company reported a surprise profit for its first quarter.
In the three months ended March 31, Carvana’s revenue increased 17% to $3.1 billion while its earnings per share (EPS) improved to 23 cents from a loss of $1.51 in Q1 2023. These results were driven by its retail units sold increasing 15.9% to 91,878 and its gross profit per unit increasing 49.4% to $6,432 from the year-ago period.
"We delivered our best results in company history, validating our long-held belief that Carvana’s online retail model can drive industry-leading profitability while delivering industry-leading customer experiences," Carvana founder and chief executive officer Ernie Garcia said in a statement. "We reached new Q1 milestones for all key profitability metrics while also growing 16% year over year."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results met or beat analysts’ expectations. According to Yahoo Finance, Wall Street was expecting revenue of $3.1 billion and a per-share loss of 74 cents per share.
For the second quarter, Carvana said it expects to achieve a sequential increase in its year-over-year growth rate in retail units and a sequential increase in its adjusted EBITDA.
"With our strong results in Q1 and outlook for Q2, we expect to comfortably deliver on our outlook of year-over-year growth in retail units sold and Adjusted EBITDA for FY 2024," Carvana said.
"With these strong results, significant fundamental margin opportunities ahead, and a nationwide infrastructure that can support multiples of our current scale, we have never been more confident in our opportunity to become the largest and most profitable automotive retailer and to buy and sell millions of cars," Garcia said.
Is Carvana a buy, sell or hold?
According to S&P Global Market Intelligence, analysts' average target price for the used car retailer's stock is $67.53, representing implied downside of more than 40% to current levels. Additionally, the consensus recommendation is Hold.
However, these estimates may very well change in the days ahead as analysts revise their price targets following the strong first quarter results.
Financial services firm Wedbush provided an update earlier today, maintaining its Neutral (the equivalent of Hold) rating on the stock, while raising its price target from $80 to $120 – right around where the stock trades now.
"While we were positive into the print, and see continued near-term momentum in fundamentals, positive catalysts will be more limited as we move through the year, keeping us Neutral on CVNA," Wedbush said.
Related Content
-
Small Businesses Are Racing to Use AIThe Kiplinger Letter Spurred on by competitive pressures, small businesses are racing to adopt AI. A recent snapshot shows the technology’s day-to-day uses.
-
The Me-First Rule of Retirement SpendingFollow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial ProfessionalWinning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
-
S&P 500 Slips Ahead of Fed Week: Stock Market TodayAll eyes are on the Federal Reserve ahead of next week's critical policy meeting.
-
September Fed Meeting: Live Updates and CommentaryThe September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your InvestmentsDon't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
-
Want to Shave 10 Hours Off Your Workweek? A Startup Expert Shows How AI Can HelpArtificial intelligence is overhauling how companies operate, freeing up entrepreneurs and their workers to skip the menial stuff and get down to business.
